KEN Griffin’s Citadel Advisors, Pacific Investment Management Company (Pimco) and Western Asset Management are among the investment firms poised to own equity in Spirit Airlines after the budget carrier restructures its balance sheet in bankruptcy.
The three firms are part of a group that owns Spirit’s 8 per cent senior secured notes due in 2025 and is supporting the company’s restructuring plan, according to a Monday (Nov 25) court filing. Those notes, along with convertible bonds, will be exchanged for equity in Spirit once it exits bankruptcy next year, according to a description of the restructuring plan submitted in bankruptcy court.
About US$1.1 billion in senior notes were outstanding at the time Spirit filed Chapter 11 earlier this month. Citadel is the largest single holder of senior notes in the ad hoc group, owning roughly US$149.3 million of the debt through affiliates, funds or accounts it manages, according to court documents.
Pimco owns US$136.4 million, while Franklin Resources’s Wamco holds US$106.9 million, court documents show. Other large holders on the ad-hoc committee include AllianceBernstein Holding, Arena Capital Advisors and Ares Management.
Lawyers representing the ad hoc committee did not respond to requests for comment on Wednesday.
Under the terms of the proposed restructuring, which must be approved by a New York bankruptcy judge, about US$795 million worth of senior notes and additional convertible notes will be swapped for Spirit’s equity. A separate ad hoc group of convertible noteholders was disclosed in court earlier this month and includes affiliates of Cyrus Capital Partners and Shaolin Capital Management.
The restructuring plan also calls for the new issuance of US$700 million in senior secured notes and US$140 million of convertible notes as Chapter 11 exit financing, according to court documents. Spirit will also raise US$350 million through an equity rights offering, which is fully backstopped.
Spirit filed for bankruptcy earlier this month, after a proposed merger with JetBlue Airways fell through. The carrier has said it already has enough creditor support to execute the restructuring plan and expects to exit Chapter 11 by early March. BLOOMBERG
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